"The jury found the '288 patent valid and enforceable, but not infringed by
St. Jude's ICDs." The judge overturned the jury, finding the patent invalid. The
judge was reversed on appeal, including claim construction. The judge found the
patent invalid again.

We agree with Cardiac that anticipation was not properly before the
district court on remand. In the 2004 Opinion, we clearly stated that the
purpose of the remand was "for a new trial of infringement and reassessment
of damages." 2004 Opinion, 381 F.3d at 1374. Furthermore, we
explicitly "reinstate[d] the jury verdict of validity." Id. The
mandate rule requires that the district court follow an appellate decree as
the law of the case. Sibbald v. United States, 37 U.S. 488, 492
(1838). Therefore, according to our explicit instructions, any new trial on
remand was limited to an assessment of infringement and a calculation of any
damages.

But with a new claim construction, invalidity could again rear its head. But
only if a changed claim construction created a new opening for prior art to
sneak in for the kill. It didn't.

Thus, the question before us now is whether anticipation is a "directly
related new issue" in this case, or whether our reinstatement of the jury's
validity verdict precludes raising anticipation on remand. The jury found
the claims of the '288 patent nonobvious in light of numerous prior art
references, including both Duggan and Denniston. In overturning the jury's
validity verdict, the district court permitted St. Jude to raise
anticipation arguments on remand that St. Jude did not raise at trial. The
court based its decision on the fact that "St. Jude may have chosen not to
pursue some invalidity defenses, including anticipation, at trial," due to
the erroneous claim construction of "determining" used at trial. Damages
Decision, 418 F. Supp. 2d at 1033. In finding the claims of the '288
patent nonobvious, the jury necessarily reached the conclusion that some
element necessary to prove obviousness had not been demonstrated. For St.
Jude to succeed in this appeal, that missing element would have to have been
the "determining" limitation.

While it is true that a changed claim construction may permit new
anticipation arguments, that cannot be the case here because the
"determining" limitation never served as a basis for distinguishing the
prior art from the '288 patent and is therefore not a "directly related new
issue."

The jury found that those references did not invalidate the patent even
though Cardiac did not dispute that the "determining" construction was known
in the prior art. Thus, it cannot be said that the jury's decision hinged on
the erroneous construction of that claim. Stated differently, the jury's
verdict of validity could not have depended upon the erroneous construction
of "determining" because it was uncontested during trial that that term was
present in the prior art.

Damages

The district court limited damages to devices that infringed the asserted
method claim.

We agree with St. Jude that the district court correctly limited damages
to those devices that were shown to infringe the '288 patent.

In the present case, however, Cardiac is not seeking lost profits on an
apparatus and therefore cannot rely on the reasoning in Stryker.
Here, Cardiac seeks royalties on its patented method. "A method claim is
directly infringed only by one practicing the patented method." Joy Tech.
v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir. 1993).

Before analyzing the merits of St. Jude's cross-appeal, some background
on Section 271(f) is in order. In Deepsouth Packing Co., Inc. v. Laitram
Corp., 406 U.S. 518 (1972), the Supreme Court held that a manufacturer
who shipped unassembled parts of a patented shrimp deveining machine abroad
was not liable for patent infringement. Because "it is not an infringement
to make or use a patented product outside of the United States," the Court
held that the shipment of unassembled components of the deveining machine
did not constitute patent infringement. Id. at 527, 531.

In response to Deepsouth, Congress enacted Section 271(f). See,
e.g., Patent Law Amendments of 1984, S. Rep. No. 98-663, pp 2-3 (1984)
(describing Section 271(f) as a response to the "Deepsouth decision
which interpreted the patent law not to make it infringement where the final
assembly and sale is abroad"); see also Microsoft Corp. v. AT&T Corp.,
550 U.S. 437, 444 & n.3 (2007) (AT&T II) (stating that Section 271(f) was
enacted with Congress "[f]ocusing its attention on Deepsouth").

Section 271(f) provides in full as follows:

(1) Whoever without authority supplies or causes to be supplied in or
from the United States all or a substantial portion of the components of
a patented invention, where such components are uncombined in whole or
in part, in such manner as to actively induce the combination of such
components outside of the United States in a manner that would infringe
the patent if such combination occurred within the United States, shall
be liable as an infringer.

(2) Whoever without authority supplies or causes to be supplied in or
from the United States any component of a patented invention that is
especially made or especially adapted for use in the invention and not a
staple article or commodity of commerce suitable for substantial
noninfringing use, where such component is so made or adapted and
intending that such component will be combined outside of the United
States in a manner that would infringe the patent if such combination
occurred within the United States, shall be liable as an infringer.

35 U.S.C. § 271(f).3

3 Our analysis here focuses on 271(f)(1), but is equally
applicable to 271(f)(2). While the two paragraphs differ in some
respects, neither party argues that the differences are relevant in this
case. Indeed, both paragraphs require the "supply" of "components" that
are capable of being "combined outside of the United States." Compare 35
U.S.C. § 271(f)(1) & (2); see also AT&T II, 550 U.S. 437, 454 n.16. The
definition of those terms guides our analysis on this issue.

The Supreme Court subsequently examined Section 271(f) when it granted
certiorari and reversed our decision in AT&T I. AT&T II, 550
U.S. 437 (2007). The Court held that Microsoft did not supply combinable
components of a patented invention when it shipped master disks abroad to be
copied. Because the foreign-made copies of Windows that were installed on
computers were supplied "from places outside of the United States," the
Court held that Microsoft had not supplied components from the United
States. Id. at 452. The court reserved judgment on whether "an
intangible method or process . . . qualifies as a 'patented invention' under
§ 271(f)," but noted that if so, the "combinable components of that
invention might be intangible." Id. at n.13. The Court sent a clear
message that the territorial limits of patents should not be lightly
breached. Id. at 454-56.

Now to an old sore point. The en banc court, with one notable exception,
discriminates against method claims when applying 271(f).

Our precedents draw a clear distinction between method and apparatus
claims for purposes of infringement liability, which is what Section 271 is
directed to. See, e.g., Joy Tech., 6 F.3d at 773-75 (stating that
method claims are infringed only by practicing the steps of the method); NTP,
418 F.3d 1282, 1318 ("[A] patent for a method or process is not infringed
unless all steps or stages of the claimed process are utilized."). Section
271(f) "applies only to 'such components' as are combined to form the
'patented invention' at issue." AT&T II, 550 U.S. at 449 (footnote omitted).
"Component" is defined as "a constituent part," "element," or "ingredient."
Webster's Third New International Dictionary of the English Language 466
(1981); see also AT&T II, 550 U.S. at 449 n.11 (adopting same
definition in Section 271(f) case). As we have seen, the patented invention
at issue when a method patent is implicated consists of a "series of acts or
steps." In re Kollar, 286 F.3d at 1332. The elements of a method are
the steps that comprise the method. Thus, method patents do have
"components," viz., the steps that comprise the method, and thus they meet
that definitional requirement of Section 271(f), but the steps are not the
physical components used in performance of the method.

Section 271(c) contrasts "a component of a patented machine, manufacture,
combination, or composition" with a "material or apparatus for use in
practicing a patented process." 35 U.S.C. § 271(c). Congress clearly
believed that a "component" was separate and distinct from a "material or
apparatus for use in practicing a patented process." Thus, a material or
apparatus for use in practicing a patented process is not a component of
that process. The components of the process are the steps of the process.

Although such patented methods do have components, as indicated, Section
271(f) further requires that those components be "supplied." That
requirement eliminates method patents from Section 271(f)'s reach. The
ordinary meaning of "supply" is to "provide that which is required," or "to
furnish with . . . supplies, provisions, or equipment." Webster's Third New
International Dictionary of the English Language 2297 (1981). These meanings
imply the transfer of a physical object. Supplying an intangible step is
thus a physical impossibility, a position that not even Cardiac seems to
dispute. See Appellants' Br. 15 (arguing that steps of a patented process,
"which conceptually could not be supplied from the United States," were not
the components of the process). As we have noted before, "it is difficult to
conceive how one might supply or cause to be supplied all or a substantial
portion of the steps in a patented method in the sense contemplated by"
Section 271(f). NTP, 418 F.3d at 1322.

In sum, the language of Section 271(f), its legislative history, and the
provision's place in the overall statutory scheme all support the conclusion
that Section 271(f) does not apply to method patents.

The last word on the subject belongs to the finest mind on the federal bench:
Judge Newman.

I respectfully dissent from the court's interpretation of 35 U.S.C.
§271(f) as excluding all process inventions. The statutory term "patented
invention" in §271(f) has the same meaning in this subsection as in every
other part of Title 35: it is the general term embracing all of the
statutory classes of patentable invention. The court's interpretation of
§271(f) to exclude all process inventions is contrary to the text of the
statute, ignores the legislative history, is without support in precedent,
and defeats the statutory purpose.

From that preamble, Judge Newman sallies forth to attack the heart, and every body part, of the majority's position.

The simple purpose of §271(f) is that, for patented inventions, a United
States patent cannot be avoided by providing substantial components from the
United States while performing some aspect offshore to avoid a technical act
of infringement under §271(a). Section 271(f) draws no distinction between
process and product inventions, and such distinction is unrelated to the
legislative purpose.

The court's ruling reopens, for process inventions, the loophole that was
plugged by §271(f) for all patented inventions.

Posted by Patent Hawk at August 21, 2009 11:56 PM
| Case Law

Comments

Clueless as usual. Newman, not the majority, got it right. 271(f) contains the same "patented invention" language as 271(e)(1) which has been interpreted broadly. Why this term shouldn't be interpreted the same is never explained by the majority.

Whether 271(f) makes economic sense for America's export market is another matter. But that's no excuss for misinterpreting not only the language of the statute, but also the legislative intent.

Posted by: EG at August 24, 2009 4:04 AM

The reason the majority never answer the question is because it is a nonquestion. That is, the majority DOES interpret it the same. They take no issue with including method claims under the "invention" wording of the statute.

The issue is that the party in question never did export any components of the instant method claim. And, as a matter of fact, they never will be able to. Ever. Because method claims do not include components, they include method steps. Therefore, while that stat category is covered by the statute, nobody ever actually violates this statute with a method claim because they never export components of a method claim.

Interestingly Judge Newman never addresses how one exports a step. She simply bses about how to export instructions for doing a step. Nobody gives two shts about instructions in a method claim. They give a sht about steps. The two things are not synonymous. The nearly unified CAFC got it right. End of story.

It would be helpful for you to note that all the CAFC is saying is that the law is defective for this purpose. If congress wrote a defective law then they need to address it, not have the courts fudge for them. All they need to do is say "components, or components utilized in or by a method step,". It really isn't that hard. Frankly, I don't even think that the congress wants that to be included. They wrote a statute just above this one (c? iirc) to address method claims.

Posted by: 6000 at August 24, 2009 12:25 PM

6,

Sorry, but Newman still has the better argument on the meaning of "patented invention" in 271(f). The majority's reliance on 271(c) would be better if 271(f) was contemporaneous with 271(f) but it isn't (by many years). Instead, as Newman points out, 271(f) is contemporaneous with 271(e)(1) which has the same "patented invention" language which SCOTUS has interpreted broadly.

And you are correct that Congress could have written 271(f) better. In fact, 271 is now a patchwork mess of paragraphs that use different phrases to refer to the invention that is covered. This is especially true when comparing 271(f) to 271(g).

Posted by: EG at August 24, 2009 1:36 PM

"Sorry, but Newman still has the better argument on the meaning of "patented invention" in 271(f). "

Her argument is not related to the issue at hand. If it was, then it might be a good one.